**QUESTION ” 3a” ONLY AND SHOW FULL WORK AND EXPLANATION!! if you use excel please attach file in answer**

3. (40 points) capital budgeting , time value of money

You are given with the following information of two projects planned by your company. **Each cash flow per year shown in Table 1 represents the cash flow at the end of each year during the project.** For instance, for project A, the cash flow as 613 in first year is expected at the end of the Year 1. The initial outlays for the projects are paid out by installments with regular payments as 0.89 million at the

**of each year for project 1 and $0.91 million per**

__beginning__**of each year for project 2, respectively.**

__beginning__Project Year 1 Year 2 Year3 Year4 Year5

A 734 2002 1520 2317 2019

B 638 3109 2540

USE THE CHART

a) Suppose the cost of capital (or so-called discount rate) is 12%, what is the Net Present Value for each project? Which project would you prefer? Why?